I just got this one from a member: A few weeks ago, Corp Fin issued two interesting no-action responses to Goldman Sachs regarding the evaluation of risk. Through them, I think the Corp Fin Staff is trying to define the contours of the risk assessment guidance provided in Staff Legal Bulletin 14E back in ’09. As you’ll recall, the Staff indicated in that SLB that it will evaluate whether a proposal is excludable under 14a-8(i)(7) by focusing on the type of risk that the proposal seeks to address (i.e., climate change risk is not excludable but proposals relating to ordinary business risk are).

Interestingly, the first Goldman letter seems to turns this concept on its head. In that letter, the Staff concluded that Goldman could not exclude a proposal requesting:

“that the board prepare a report disclosing the business risk related to developments in the political, legislative, regulatory, and scientific landscape regarding climate change.”

That did not sound like ordinary business risk to the Staff. In denying exclusion, the Staff noted that:

“We are unable to concur in your view that Goldman Sachs may exclude the proposal under rule 14a-8(i)(7). In arriving at this position, we note that the proposal focuses on the significant policy issue of climate change. Accordingly, we do not believe that Goldman Sachs may omit the proposal from its proxy materials in reliance on rule 14a-8(i)(7).”

“the board report to shareholders the risk management structure, staffing and reporting lines of the institution and how it is integrated into their business model and across all the operations of the company’s business lines.”

Given the role that risk played in the collapse of so many Wall Street firms – and the issues that Goldman has had to address with the SEC – I think some might have expected the Staff to take the position that this proposal raises significant policy issues. But not so as the Staff allowed the exclusion, noting that:

“There appears to be some basis for your view that Goldman Sachs may exclude the proposal under rule 14a-8(i)(7), as relating to Goldman Sachs’ ordinary business operations. We note that the proposal relates to the manner in which Goldman Sachs manages risk.We further note that the proposal addresses matters beyond the board’s role in the oversight of Goldman Sachs’ management of risk.”

It will be interesting to see how these tough judgment calls continue to play out…

In his “Proxy Disclosure Blog,” Mark Borges gives us the latest say-when-on-pay stats: with 291 companies filing their proxies, 55% triennial; 5% biennial; 35% annual; and 5% no recommendation. Mark notes that last week was the first in which annual exceeded triennial recommendations during a single week – and that out of the 104 companies that have reported voting results, 9 have had 30% or greater “against” votes for their SOP.

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